ChatGPT Creator Faces First Major Regulatory Threat With FTC Investigation

With artificial intelligence (AI) flying high for Web3 and the wider the world to see and embrace, it shouldn’t be a surprise that the Federal Trade Commission (FTC) has turned its attention to OpenAI, the maker of ChatGPT, in a new investigation, according to an initial report by The Washington Post. 

The agency sent the San Francisco startup a 20-page letter demanding answers for how it is addressing ongoing complaints of misuse of consumer data and cases of “hallucination,” i.e., instances where ChatGPT has made up facts or narratives that have caused reputational harm.

The FTC’s ask

OpenAI will now serve as the FTC’s first public case study for how the agency begins to enforce consumer protection warnings with respect to AI while addressing potentially unfair or deceptive trade practices. The company’s co-founder Sam Altman testified before Congress in May, inviting AI legislation to come into the mix.

In the letter, the FTC wants to gauge how well consumers understand “the accuracy or reliability of outputs” generated by the company’s AI tools, calling on OpenAI to:

Provide detailed descriptions of all the complaints the startup has received of its products, including ChatGPT, making “false, misleading, disparaging or harmful” statements about people;

Provide records related to a security incident that OpenAI disclosed in March when a system bug allowed some ChatGPT users to see payment-related information in addition to customer data from other user’s chat history;

Provide any research, testing, or surveys that assess customers’ understanding of how OpenAI’s products work, how they’re advertised, and how these AI-based tools can generate disparaging statements.

Zooming out

The FTC’s focus comes at a time when the agency wants to explore several instances of hallucination. The agency’s active mission is communicating that existing consumer protection laws apply to AI, despite the Biden Administration’s and Congress’s ongoing struggle to put together a regulatory framework. 

Last month, Senate Majority Leader Chuck Schumer (D-NY) predicted that new AI legislation is just a few months away while the European Union’s AI Act moves into its final phases of negotiations.

Vice President Kamala Harris believes that we can both advance AI innovation and protect consumers, sharing the administration’s position on Wednesday at the White House, where Harris hosted a group of consumer protection advocates and civil liberties to discuss the safety and security risks of AI.

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